Banks warned against failure to clear import bills

Bangladesh Bank yesterday lambasted local banks for their failure to settle import bills with the corresponding foreign lenders on time.

The required actions will be taken against the banks that do not follow the due diligence in this regard as it has tarnished the country's image abroad.

The central bank came up with this instruction at a bankers' meeting held through an online platform yesterday.

Bangladesh Bank Governor Fazle Kabir presided over the meeting attended by managing directors of all banks.

"We asked the banks to settle their overdue import bills in the interest of the country's financial sector, or else necessary actions will be taken," said Md Serajul Islam, an executive director and spokesperson of the central bank.

Bangladesh Bank will issue letters to the concerned banks, asking them to settle their overdue import bills in the quickest possible time, said managing directors of two separate banks preferring anonymity.

If the banks fail to do so, the central bank will debit the overdue funds from the respective banks' current accounts with it.

Bangladesh Bank will then pay the amount to the creditor bank, they said.

The number of allegations placed by foreign embassies in this regard has been rising as the respective overseas lenders failed to get their export earnings in due time, according to a Bangladesh Bank report.

Against this backdrop, the central bank raised the issue before the bankers' meeting.

The central bank arranges the bankers' meeting every three months.

The failure to settle import bills has increased the 'add confirmation charge' as well, the report said.

Confirmation fees are a security mechanism that eliminates risks for exporters.

When exporters are not satisfied with the LC-issuing bank, mainly for its insolvency risks, political issues in the importing country or both, they may seek an additional guarantee for the LCs.

The central bank recently verified the unsettled import bills of 29 banks, of which the performance of some lenders was not good at all, the report said.

As of September last year, the overdue of unsettled import bills stood at $23.79 million.

Besides, the banks did not settle local import bills amounting to $31.22 million.

Banks are engaging in disputes with each other to settle the import bills and the number of allegations has also been rising to this end, the central bank report said.

Bangladesh Bank spokesperson Islam also said that the central bank had asked banks to implement the stimulus packages at a faster pace for cottage, micro, small and medium enterprises, including the one for the agriculture sector.

In April last year, Bangladesh Bank introduced a stimulus package for the SME sector worth Tk 20,000, of which around 60 per cent has been disbursed so far.

The central bank also declared another package for the agriculture sector amounting to Tk 5,000 crore.

Banks have so far given out nearly 70 per cent of the package.

The two packages will have to be fully implemented by the banks within March next year, Islam said.